Colorado Recreational Cannabis Supply Glut…

Colorado Recreational Cannabis Supply Glut Pressures Prices

August 27, 2016 at 12:01 pm

Published by NCV Newswire

Boulder-based reporter Shay Castle examined the recreational cannabis market in Colorado as well as the medical market, which is distinct with respect to production, explaining what she describes as a precipitous decline in the wholesale price of cannabis in the recreational market. She cites several sources, including online wholesaler Tradiv, which said that the price has declined by roughly 40% over the past nine months to about $1500 per pound. At the same time, the price per pound in the medical market, which is restricted from wholesale activity, has held steady at about $1900 per pound. She also incorporated data from Cannabase as well as BDS Analytics, which describes retail pricing for edibles as steady, creating better margins for manufacturers that are benefiting from lower input costs.

The weighted average price for warehouse flower in Colorado dropped 25% between the weeks ending July 1st and August 5th. Though those rates have recovered slightly in recent weeks, prices for indoor product in Colorado remain in many cases roughly $1,000 less per pound or more than they are in states such as Nevada, Arizona, and Illinois, as well as the small East Coast markets.

Castle points to the surge in recreational growers, increasing over the past year by 18% to 583, while the number of medical growers has grown only 5%. BDS Analytics founder and CEO Roy Bingham predicts that the plunging wholesale prices could disrupt vertical integration in the recreational cannabis market, leading to more businesses focused solely on production or on retail.

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